The Excelsior City Council granted final approvals this week for high-end apartments and a parking garage to be built on the site of the current City Hall — but the project has raised questions about how a city prized for its quaintness should look in the future.

The development of downtown apartments and townhouses planned for 339 Third St., just off Water Street, will stand out in Excelsior, where a market-rate apartment building has not been built since Richard Nixon was president.

"When this is completed, it will be a major game-changer for the city of Excelsior," especially the addition of hundreds of public parking spaces downtown, said developer Dan Johnson of Red Leaf Partners.

The development will replace the 1960s-era City Hall and a surface parking lot with 50 new apartments and townhouses and an underground parking garage of more than 300 stalls.

Though Excelsior has a handful of apartment buildings from the 1960s and 1970s, as well as townhouses and a new senior living complex, change has at times been painful for the city, beloved for its village-like feel but where skyrocketing property values have persuaded developers to tear down small, older homes, opening subtle divides between longtime residents and newcomers. Adding to the tension is the fact that the new development will involve tearing down the old City Hall, vacated last month after years of discussion because it is too small and not accessible to people with disabilities.

Residents are divided on whether the planned downtown development will be for better or worse, in a city that covers just one square mile and has seen its character shift dramatically in recent decades. Opponents have raised concerns about parking, as well as about whether new residents will value the community.

"Don't change Excelsior to something that's ordinary or mediocre, or worse, that we no longer feel the comfort of being home," former Council Member Bob Bolles said during a meeting last month about the new apartments.

Resident Joan Maher disagreed.

"It's going to make us as a whole in the city center more complete," she said.

In addition to being a unique change to the city, the apartments and townhouses will also be uniquely expensive for Excelsior: Studios will start at $1,500 per month, and rent for three-bedroom townhouses will top out at $7,000. Johnson said he thinks there's a market in Excelsior for such homes, and said the prices were "finding that equilibrium" between affordability and making enough money through tax-increment financing (TIF) to finance the parking garage. Johnson said prices were comparable to similar developments in Wayzata.

Planning and council meetings about the development started in 2021, with the council voting to approve the project and TIF for the parking garage on Monday.

Johnson said he hopes to finish major construction by spring 2024.